University bosses and lecturers reacted with anger and alarm last night over government plans to encourage academics to spy on their students. They said the measures, outlined in a leaked document obtained by the Guardian, were misplaced and likely to be counterproductive in the drive to root out extremist activity on university campuses.

According to the proposals drawn up by the Department for Education and Skills, ministers are to ask staff to spy on "Asian looking" or Muslim students, informing special branch of anyone they suspect of being involved in Islamic extremism.

Downing Street yesterday briefed that they wanted lecturers to promote pluralism, not to spy on students. But the document seen by the Guardian did not contain the phrase.

Ruth Kelly, the communities secretary, reiterated that academic staff were not being asked to "spy" but rather to monitor their students.

But Paul Mackney, the joint general secretary of the University and College Union, said: "We expressed concern that we were being sucked into a kind of Islamic McCarthyism which has major implications for academic freedom, civil liberties, and blurring of the boundaries between the illegal and the possibly undesirable," he said.

Last night the vice chancellors' umbrella group Universities UK said it had been involved in ongoing talks with ministers over their plans to tackle campus extremism. UUK President Drummond Bone said: "While this is clearly a draft document, there are dangers in targeting one particular group within our diverse communities of students and staff. Not only is this unreasonable but, crucially, it could be counterproductive. The key to this is balance and discussion - and we have made this point repeatedly to ministers."